Rand steadies after cabinet announcement

Rand Source: Google Images

The rand was steady against the dollar on Thursday morning, gradually recovering after hitting a seven-month low on Wednesday.

Uncertainty in the global environment due to the ongoing trade war between US and China continues to weigh on emerging-market currencies.

The rand found some relief after President Cyril Ramaphosa announced his new cabinet on Wednesday night, strengthening  0.4% to R14.67/$ after hitting an intraday low of R14.89/$.

Markets had been closely watching the composition and size of the cabinet, which has been reduced from 36 to 28 ministers. Cabinet members in some key portfolios retained their positions, including finance minister Tito Mboweni.

“The retention of Tito Mboweni as finance minister and Pravin Gordhan as minister of public enterprises will appease markets and result in a positive perception of cabinet,” said Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions.

“These key appointments should contribute to political stability while ensuring the continuance of the pro-economic growth foundation set by the president and the two ministers, in particular, over the past year.”

At 9.30am, the rand was unchanged at R14.6407/$ and gained 0.1% to R16.2947/€ and 0.15% to R18.4752/£. The euro was flat at $1,1129.

The benchmark R186 government bond had strengthened, with its yield falling 4.5 points to 8.43%. Bond yields move inversely to bond prices.

Gold fell 0.32% to $1,275.69/oz and platinum was unchanged at $793.63. Brent crude was flat at $69.72 a barrel.

On the local front, Producer Price Index (PPI)  figures are expected to be released this morning. The US will release first-quarter GDP figures as well as jobless claims and consumption expenditure.